Correlation Between Decred and SLS

Can any of the company-specific risk be diversified away by investing in both Decred and SLS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Decred and SLS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Decred and SLS, you can compare the effects of market volatilities on Decred and SLS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Decred with a short position of SLS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decred and SLS.

Diversification Opportunities for Decred and SLS

0.9

Correlation Coefficient

Decred  SLS

Almost no diversification

The 3 months correlation between Decred and SLS is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Decred and SLS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLS and Decred is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Decred are associated (or correlated) with SLS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLS has no effect on the direction of Decred i.e., Decred and SLS go up and down completely randomly.

Pair Corralation between Decred and SLS

Assuming the 90 days trading horizon Decred is expected to generate 1.93 times more return on investment than SLS. However, Decred is 1.93 times more volatile than SLS. It trades about 0.12 of its potential returns per unit of risk. SLS is currently generating about 0.21 per unit of risk. If you would invest  1,368  in Decred on April 22, 2025 and sell it today you would earn a total of  355.00  from holding Decred or generate 25.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Decred  vs.  SLS

Decred

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Decred are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Decred exhibited solid returns over the last few months and may actually be approaching a breakup point.

SLS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SLS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SLS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Decred and SLS

The main advantage of trading using opposite Decred and SLS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decred position performs unexpectedly, SLS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SLS will offset losses from the drop in SLS's long position.

The idea behind Decred and SLS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.